A CAB firm whose female directors have links to two convicted drug dealers has been refused a licence to operate - as tough new taxi laws start to bite.

Council bosses branded Carol Reilly and Denise McNeil not fit to run Canniesburn Cabs after Strathclyde Police chief Stephen House objected to their bid.

And they accused the women of being a FRONT for other people in an attempt to boost the application's chance of success.

The blow came on the same day that Scotland's biggest taxi firm, Network Private Hire, was also given a knockback.

Last night a gangland insider revealed: "The new laws are having a devastating effect. Councils now have greater powers and the cops are making the most of it.

"But it's not over - there is a lot of money at stake and an appeal process."

Carol Reilly, 44, who has a 25 per cent share in Canniesburn Cabs, is married to drug dealer Sean Reilly - a close associate of Denise McNeil's boyfriend, underworld kingpin William O'Neil.

Reilly, 44, was caged for seven years in 2003 after he was caught with a stash of ecstasy pills worth £600,000.

The haul of 61,979 tablets was discovered in a raid on Mallon's pub in Glasgow's Lambhill - close to where Reilly was thought to run a car wash and valeting business.

He was also caught handing over another 10,000 ecstasy pills to a man outside Green's Gym in Finnieston.

McNeil, 39, also has a 25 per cent stake in the firm and is dating heroin dealer O'Neil (right) - caged in 2001 after being caught with £250,000 of the deadly drug.

We told last June how celebrity artist Peter Howson had fallen into the clutches of the crook's firm Art & Soul. In October

last year O'Neil's home in Bardowie, Glasgow, was raided by cops. A number of Howson paintings were seized and O'Neil, 43, and McNeil were charged under proceeds of crime laws.

The couple had already been hit with a confiscation order for £103,845 in 2003 and it's thought more than £70,000 is still outstanding.

O'Neil's brother Stephen, 38, is also a director of Milgavie- based Canniesburn - operated by Taxeeze Ltd - with a 25 per cent share. An East Dunbartonshire Council spokeswoman said: "The licensing authority refused the licence on two grounds. First, that Carol Reilly and Denise McNeil are not fit and proper persons to be the holder of a booking office licence.

"Secondly, that the activity to which the application relates would be carried out for the benefit of persons other than the applicants, who would have been refused the grant of such a licence if they had made the application themselves."

In November the News of the World revealed Network Private Hire were the focus of a Strathclyde Police probe. They were also refused a licence on Thursday, putting a £2million NHS contract at risk.

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